“Is PayPal good for your microISV business?” A short PayPal horror story

From a recent blog article:

I’m running my Mac indie software business for more than 3 years now. For the first 2.5 years all my sales went through Kagi and later I decided to switch to PayPal. The sales were not high, PayPal worked well and all was good.

This year, me and my partner Kosta decided to do some creative marketing for our application, ImageFramer. We decided to partner with several other developers of graphics software for the Mac and to sell all the software together, as a bundle, for 2 weeks. After months of preparations, negotiations and development, finally, MacGraPhoto bundle was launched on Nov 16.

We, at Apparent Software, were responsible for all the execution of the sale and part of it included handling all the money related issues, such as collecting the payments and distributing to other developers their shares. There were 6 other developers in addition to us. We corresponded over email, sent them a Terms and Conditions document and got their agreement to it by email.

We chose PayPal as our payment processor for several reasons but the main were low fees, the fact that we already knew how to integrate it to the sales backend and that it should be easy to pay them and to affiliates. We used our regular PayPal account, which we used for regular sales. We didn’t expect what happened next.

The launch was successful and we were pleased with how the sales progressed in the first days. Three days into the sale I’ve got a phone call from PayPal and the person on the other side asked me about nature of the spike in account activity. I explained that we had a 2 week sale, a special promotion and it looked like the call went fine.

What happened next and what they put these poor developers through can only be described as a complete nightmare. Paypal has since resolved the issue, but what happened to them could happen to anyone.

http://blog.apparent...paypal-horror-story/